Is your rent too high?
Published 11:35 am Wednesday, August 5, 2020
Of North Carolina’s 100 counties, Tyrrell has next to the lowest percentage of renters who pay more than 30% of their gross monthly income for rent, according to data published by the North Carolina Association of County Commissioners.
The survey of cost-burdened renters shows that 27% of Tyrrell renters pay more than 30% of income for rent, while Graham County, which borders Tennessee, is the lowest at 18%. Thus, all counties have cost-burdened renters.
Other low-ranking counties are Macon 30%, Clay 31%, Martin 33%, and Warren 33%.
At the high end of the scale are Watauga at 65%, Pitt 52%, Perquimans 52%, Scotland 51%, and Richmond 51%.
There are two big flaws associated with the 30% rule when deciding what percentage of income to spend on rent, according to thebalance.com.
First, it doesn’t account for inflation and rising rental prices. The national median rent price declined slightly in 2018 but is on the rise again, and more rapidly in some areas than others.
Wage growth, meanwhile, is not keeping pace. Real average hourly earnings for all private nonfarm employees increased 4.3 percent from June 2019 to June 2020, the U.S. Bureau of Labor Statistics reports.
The increase in real average hourly earnings combined with a 0.3-percent increase in the average workweek resulted in a 4.6-percent increase in real average weekly earnings over the year.
The increases in real average hourly and weekly earnings largely reflect the substantial job loss over the year among lower-paid workers as a result of the COVID-19 pandemic and efforts to contain it.
The other issue with the 30% rule is that it’s not personalized to your situation, thebalance.com states. It doesn’t take into account, for example, how much student loan or credit card debt you might be paying off. Nor does it consider how much money you’re earning, your financial goals, or the condition of the real estate market where you are planning to rent.